Friday, September 17, 2010

Caught Red Handed

City Room is reporting something we have been inveighing against for the past fifteen years-the illegal buttlegging being done from Indian reservation smoke shops on Long Island. In fact, the late Ralph Penza did a marvelous undercover story on this back in 2002 when Mayor Bloomberg was calling all of this a, "minor economic issue."

But here's the lowdown-with the mayor now in the role of outraged cuckold: "An undercover investigation disclosed by the city on Thursday showed that vendors on a Long Island Indian reservation sold large quantities of cigarettes without paying city or state taxes, city officials said. City officials alleged that dealers on the Poospatuck reservation had sold more than four million cartons of untaxed cigarettes this year. They said that a video shot last week showed an undercover agent securing a discount on 60 cartons of cigarettes from two vendors, despite the fact that he announced his intention to resell them in the city."

And Bloomberg, late to the dance, manages to channel his inner Howard Beale-or something like that: "City officials said the 50-acre Poospatuck reservation, in Mastic, N.Y., was depriving state and local governments of sorely needed money. In a statement, Mayor Michael R. Bloomberg said that the law was being abused to “fill the pockets of bootleggers and crooked cigarette dealers.”

Here, here. Better late then never-and Mike has been right on the money, who else?-since getting some of our old time religion: "The investigation was the latest clash between Mr. Bloomberg and Indian tribes over cigarette sales. In 2008, the mayor filed a complaint in civil court against eight Long Island businesses, alleging that they had illegally sold cigarettes. Investigators have said that for years, many reservations have sold cigarettes in bulk to bootleggers, who then ship them to the city. Mr. Bloomberg has often criticized state officials, including Gov. David A. Paterson, for not more strictly enforcing state law and moving to recapture billions in lost revenue. The two businesses named in Thursday’s investigation were G Talk Smoke Shop and Running Bull Smoke Shop."

The NY Post gives us some more details about the Indian scam: "The investigators, who wore hidden cameras, told two separate sellers they were buying cigarettes to sell in New York City, and were able to purchase 60 cartons of untaxed smokes. “I have to do a re-sale, you know, in Brooklyn,” said one investigator who bought 30 cartons of Newports. “I don’t want to know any information that you’re talking about because our cigarettes are for personal use,” the saleswoman told him. “Should I know that you’re going to resell them, I can get in trouble. So the less I know the better.”

And until the state is finally allowed to stamp all cigarettes at the wholesale source, so that all smokes are sold with tax, we will get the Indians continuing to flout the law. As the NY Times points out: "Under state law, taxes would be charged to wholesalers, who would pass the cost to the tribes, though each would be allowed to buy a certain amount of tax-free cigarettes for members."

The Post dramatizes the breathtaking crookedness of these scofflaws: "Some of the largest shops on the Mastic, N.Y., reservation have been effectively shut down by a federal judge who ordered them to stop selling tax-free cigarettes to customers who weren’t members of the tribe. Those stores, however, have been replaced by new shops not covered by the court order. State records show that cigarette sales on the reservation have dropped, but business continues to be robust. The city has accused several merchants who were covered by the court order of secretly reorganizing and continuing to do business through relatives or front companies."

Now we are waiting for a federal judge to resolve this so that the state can do what it is supposed to do-simply enforce the law without fear or favor.